Democrats and Republicans… for the sake of America, agree at least on eliminating bank regulations which discriminate against "The Risky” and in favor of "The Infallible"

The access to bank credit has been rigged against those perceived as "risky", like small businesses and entrepreneurs, by means of requiring banks to hold much higher capital when lending to them compared with what the banks need to hold when lending to those perceived as “not risky”. 

This, in a country that became what it is, thanks to risk-taking, and which also likes to refer to itself proudly as “the land of the brave”, is a direct affront to the American courage and spirit of entrepreneurship.

This, is what most neutralizes the impact of fiscal and QEs stimulus, and which most stands in the way of job creation.

Why cannot Democrats and Republicans set aside their differences for one second, and agree on eliminating any bank regulations which discriminate against those perceived as “risky”? 

Would they do so, there would be no reason to concern themselves with a heightened risk in the financial sector, since never ever has a major bank crisis resulted from excessive exposure to those perceived as “risky” (consult your Mark Twain), these have always resulted from excessive exposures to what was ex ante erroneously considered as “absolutely-not-risky”.

Republicans could sell it to their side, correctly, as an elimination of regulatory distortions that impede the markets to efficiently allocate economic resources. 

Democrats could sell it to his side, also correctly, as an elimination of a discrimination against the “risky-not-haves” and in favor of the “not-risky-haves” which drives increased inequality.

Both parties need to understand that discriminating against "The Risky" and in favor of "The Infallible" is about as Un-American it gets... in fact it is outright immoral!

http://perkurowski.blogspot.com/2008/08/discrimination-based-on-financial.html

When facing a cliff… are you sure you want to go forward?

This economy did not collapse because of lack of stimulus, it collapsed because of bad regulations that gave banks too big incentives to acquire huge exposures with some of “The Infallible”, helping to make the not-risky risky, and by banks not wanting to hold exposures to “The Risky”, like to small businesses and entrepreneurs.

And since those basic bank regulation principles have not yet been changed one iota, I simply do not understand why any sort of stimulus package should be able to turn around the economy in a sustainable way, and that is why I find the whole discussions in the US about the fiscal cliff, although interesting quite irrelevant. 

And this cliff debate also makes me remember some politician somewhere gloriously stating: “We are standing in front of the precipice; it is time to take a big step forward”.